All-female shortlists for boards ruled out

The option to create all-female shortlists for board appointments, favoured by Business Secretary Vince Cable as part of efforts to boost the number of women at the top of companies, has now been ruled out in new guidance published by the Equality and Human Rights Commission (EHRC).

EHRC’s guidance states: ‘We do not believe that it is lawful to address under-representation by longlisting or shortlisting only female candidates to the detriment of male candidates.’

The equalities body says that ‘appointments to boards must be made on merit, demonstrated through fair and transparent criteria and procedures’. 

In general, it constitutes unlawful sex discrimination to select a person for a role because of their gender, and EHRC says the law does not permit positive discrimination when making an appointment or a promotion.

However, the EHRC says the law does provide scope for companies to address any disadvantage or disproportionately low participation on boards by enabling or encouraging applications from a particular gender, provided selection is made on merit.

The equality body also states that individuals responsible for appointments to board positions must avoid making unwarranted assumptions based on gender which result in one gender being favoured over another for appointment.

It warns that selection criteria and procedures that are likely to present barriers to the appointment of either gender will constitute unlawful indirect discrimination unless they can be justified

The EHRC says its guide sets out the legal framework within which appointments to boards must be made, and is intended to help companies, nomination committees, search firms and recruitment agencies understand what steps are permitted in order to increase the representation of women at board level.

The guidance covers the requirements of both domestic law (specifically the Equality Act 2010), and relevant European Union law.  Although it relates specifically covers the issue of women on boards, EHRC says much of its content is also relevant to the consideration of wider objectives to increase the diversity of boards.

The EHRC sums up the situation by stating that: ‘Selecting a candidate for appointment to a board on the basis of gender is only lawful when the individual is objectively assessed as being equally qualified as a candidate of the opposite gender, when the individual’s gender is under-represented on the board and when other conditions explained [in the guide] have been satisfied’.

The guide outlines two ways in which companies can look at helping to increase female representation without falling foul of the laws on discrimination. One is general positive action, such as reserving places for women on training courses for board leadership; targeted networking opportunities, mentoring and sponsorship; offering women the chance to shadow existing board members; placing advertisements where women are likely to see them to create a pipeline of applicants; and setting aspirational targets for increasing the number of women on the board within a specified timeframe.

The second option is to have clear company policies about the use of the ‘tie break’ provision when there are two equally well-qualified candidates for a board position, but the company is able to demonstrate the need to increase its female representation at senior levels.

Cable sought advice from EHRC following a report into the headhunting industry commissioned from Charlotte Sweeney, a former head of diversity at banks including HSBC and Nomura, who suggested putting at least one woman on the shortlist for all board positions.

In response to EHRC’s latest guidance, Cable said: ‘This will really help our top businesses in what has been in the past a bit of a legal grey area. It confirms it is good and accepted practice for companies to set ambitious aspirational targets to increase the number of women on their board.

‘We completely agree with the commission that board appointments must be made on merit, demonstrated through fair and transparent criteria and procedures. No woman or man wants to be on a board of a company simply because of their gender.’

EHRC’s guidance is here

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